Blacks turn to AI to streamline leasehold transactions

It reduces risk by flagging up potential problems and speed bumps to be raised with the client and resolved at the start of the process.
- Ian Errington, Head of Residential Conveyancing

Although leasehold property only accounts for 20% of housing stock in England and Wales it poses a disproportionate challenge for firms that operate nationwide and cover London and other major cities where leasehold accounts for a much higher proportion of conveyancing transactions. Leeds-based law firm Blacks, which handles up to 2,000 leasehold cases annually across the country, is embracing Artificial Intelligence (AI) to streamline its approach to leasehold conveyancing.

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Leasehold transactions have long been regarded as a challenge for residential conveyancing firms to handle at scale. The reasons are well understood by those in the industry: The additional parties and documentation, the intricacies of shared ownership, new build and retirement property, or extensive lender requirements mean that leasehold work is rarely ‘simple’. The complexity is compounded by legislative changes, such as the Building Safety Act and the Leasehold Reform (Ground Rent) Act, that reshape the landscape for conveyancers, requiring them to adapt their practices and take on extra work to comply.

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Firms do of course charge a higher fee for leasehold work but the uplift is often not enough to compensate for the additional time and risk involved. Ian Errington, Partner and Head of Residential Conveyancing at Blacks, acknowledges the time-intensive nature of leasehold work and its potential impact on profitability, "the price that the market sets for leasehold transactions doesn’t allow firms to recover the amount of additional time spent dealing with leasehold work".

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Blacks: A Pioneering Approach

As the market rate for leasehold transactions remains challenging, with profitability often lagging behind the time and risk involved, conveyancing firms face a delicate balancing act. Some firms limit the number of leasehold instructions they take on or refuse to take on leasehold work altogether. This works to manage capacity but limits growth and puts consumers and introducers in a worse position. Some firms choose to allocate work to junior lawyers or support staff. This increases the capacity of qualified and experienced lawyers but introduces more risk to the business.

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Blacks instead turned to technology to streamline their leasehold conveyancing process. Ian adds “we wanted to save time for our experienced conveyancing lawyers, without compromising on the high standard of work and client experience we pride ourselves on”.

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It was around this time that the world was starting to wake up to the huge time-saving potential of AI with the news flooded with stories about ChatGPT. Ian and the team at Blacks decided to see if there were AI solutions for conveyancing that could help them make leasehold work profitable and scalable. That is when they came across Orbital Witness.

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Orbital Witness has delivered on our priorities for introducing AI into our process.
- Ian Errington, Head of Residential Conveyancing

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Orbital Witness: A newcomer on the conveyancing scene

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When it comes to LegalTech, Orbital Witness is a relative newcomer on the residential conveyancing scene. By contrast, in the commercial property arena, the company is an established leading provider of due diligence technology to many of the leading law firms in the industry, including every one of the Magic Circle law firms, plus a host of national and regional law firms, with over 3,000 customers since the company first arrived on the scene in 2018.

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Earlier this year the firm raised significant further investment to apply its expertise in AI to tackle leasehold conveyancing head-on. Chief Strategy Officer and Co-Founder, Edmond Boulle, says “the conveyancing industry needed a solution to make this line of work stack up from a risk-reward perspective. AI offers the ability to future-proof this line of work”.

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Orbital Witness have developed an insurance-backed AI system that checks and summarises over 60 crucial topics for any leasehold property (such as ground rent increases, remaining lease term, subletting conditions, lender requirements and much more!) as soon as a contract pack comes in. This “not only saves a significant amount of time on reporting to the client and responding to enquiries”, reports Ian, “but it reduces risk by flagging up potential problems and speed bumps to be raised with the client and resolved at the start of the process”.

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Orbital Witness’ product allows the conveyancer managing the case to see where in the documents the AI system has found the answers or identified a red flag
“Lawyers are excited but understandably cautious about adopting AI”,acknowledges Edmond Boulle. “Our approach centres on quality, transparency and insurance”. The system, which comes with insurance, has been designed and tested by property lawyers against leasehold title checklists from leading conveyancing firms on thousands of leasehold properties.

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Ian Errington emphasised the significance of this collaboration, "Orbital Witness has delivered on our priorities for introducing AI into our process. It keeps our lawyers firmly in the driving seat, and allows us to handle leasehold transactions more efficiently whilst maintaining the highest standards of due diligence and compliance."

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Where next from here?

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The conveyancing industry has a long way to go before it fully embraces AI but the partnership between Blacks and Orbital Witness may be a sign of things to come. From Edmond Boulle’s perspective, “there is a long way to go and much more to come. We are on a journey to a more automated future which starts with early adopters like Blacks”.

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In a legal landscape marked by constant change and seemingly relentless pressure on lawyers and fees, other firms are likely to follow suit and explore the benefits of AI-driven solutions for their transactions. Such partnerships underscore the importance of embracing technology to future-proof the industry against the challenges of delivering exceptional service at scale.

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